Stock market crash of 1987 summary
The Stock Market Crash bears another significant mention in the history of stock trading. The crash was big, fast and the market suffered heavy losses. Till August markets were favorable. In fact as per the records of 25th Augustthe Dow was of a But after that it only started to depreciate. But then there was an increase of Dow again. But that was only for the time being. Once again the Dow started to fall and by October 19th the market had badly crashed; so much so that the Dow had dropped to That would be almost a And if the drop had to be measured from the peak on 25th August, it was a whooping October 19th has since been referred to as the Black Monday.
Now what could be the probable reason for such an unnatural crash in the stock market? Market analysts over the years have deduced the reasons which could have resulted in this market crash. The first and foremost reason they found out was that the market lacked liquidity.
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The market failed to manage the sudden and extremely high volume of sell orders. It seemed that almost all the investors needed to sell their stocks at that particular time.
This became difficult for the market to handle and resulted in the crash. One of the many reasons that resulted in the crash of is the overvaluation of the stocks. But at that time no such crash in the stock market happened. Market Analysts who researched on supposed reasons for the crash of also believe that computer trading and security of derivatives is a major cause that resulted in the historical crash.
The big investment companies ordered extremely large stock trades through computers. This also served to be a reason for call option coupon bond big stock market crash. Now started the preparations for reforms to revive the market and pull it out from the huge crisis.
The first and foremost reform that was suggested was the uniformity of the margin requirements. This was done so that the volatility of the stocks, stock options and index features could be reduced.
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Also the installation of new computer systems was suggested so that the market could be pulled out from these difficult times as soon as possible. These computer systems that were newly installed in the stock exchanges stock market crash of 1987 summary just a single key stroke to enter the trade. Earlier this work would be tiresome and needed almost 25 keystrokes.
These new computer systems rejected the trade if a wrong input was made. That ways these computers helped increase the stock market crash of 1987 summary of data management.
They also helped to minimize errors and maximize productivity. Overall these new computer systems were helping to manage the data with much ease decreasing chances of mistakes to a great extent. Following the stock market crash was one of the major reforms that were introduced was by the Chicago Mercantile Exchange and the NYSE. This system was installed in these two exchanges to that no major market crashes further occurred. What this mechanism did was halt the market in stock market futures for wednesday of major fall of the Dow.
During this period no trade could be carried out in these two exchanges. If the Dow forex brokers in latin america points or more, the market would stop its trading for an hour.
If the fall had been for more than points then the market would halt for two hours.
The Stock Market Crash was really huge and resulted in millions of people to loose wealth. The reforms that were introduced needed to be strictly followed so that the market could get over the losses soon.
Till date the stock market crash is mentioned to be one of worst crashes in the history of stock trading. After the stock market crash this was the biggest crash to occur resulting in a huge loss. I really appreciate your post and you explain each and every point very well. I was a stockbroker at Norstar brokerage 67 Wall Street, 9th floor it was a madhouse in our office with phones ringing off the hooks. I will never forget those days. I took a beating too. Your email address will not be published.
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